Retirement property is an option for expats who are returning to Britain or
those who want a 'lock up and leave' home, and it has moved a long way from
the grim Seventies, says Saundra Satterlee.

A pleasing wind of change is blowing through the ranks of our older generations.

Take octogenarians Cyril and Yvonne, Serpentine Swimming Club members who swim outdoors 365 days of the year – on Christmas Day Cyril will be competing in the club's aptly named "Peter Pan Cup".

Dolly got her first Arsenal season ticket four years ago and now at 92, remains a faithful supporter. Pete Seeger, the folk singer, is 90 and still going strong. Nowadays there is no shortage of silver surfers and fighting fit oldies undertaking active and even dynamic pursuits.

People are living longer, healthier and increasingly active lives, a fact that is reflected in new – and vastly improved – developments in retirement housing in Britain.

Long gone are the drab granny stackers of the Sixties and early Seventies, where retirees would while away the hours in a soulless day room with a wireless or perhaps a TV and a few board games.

Enter the 21st century, where people have increasingly longer lifespans and greater affluence, too. Research from Propetyfinder.com shows that although pensioners are less than one sixth of the population, they own one third of the country's domestic property stock by value. This new generation of retirees have even been dubbed the Woofs (well-off older folk).

Meanwhile, the credit crunch appears to have had less of an impact on the retirement sector than the property market overall. "This is partly due to the imbalance between supply and demand," says Angela South, Beechcroft sales and marketing director.

More homes will need to be built to meet increasing demand. The Home Builders Federation predicts an extra 2.4 million retirement homes will be needed by 2026.

Martin Young, the chief executive of developer Archstone, maintains that while mainstream property prices have fallen by 10-20 per cent depending on the area, retirement properties have fallen much less, say 5-10 per cent.

Despite the economic downturn, Britain's retirement property market appears to be buoyant. And as increasing numbers of retirees downsize, choice abounds in retirement villages that offer apartments for rent, sale or part purchase.

The retirement village originated in Arizona, where around 40 years ago Sun City was developed as a self-contained gated community. Today Sun City boasts more than 40,000 residents, eight golf courses, a police force, hospital and every leisure facility imaginable.

Britain is developing its own style of retirement villages. Although the first was built in the 1980s in Cranleigh by Retirement Village Ltd, it was only recently that the concept began to spread.

"Three or four years ago people had hardly heard of the idea. As an increasing numbers of people become aware of the concept… more are springing up, a trend set to continue in the future," predicts Philip Smith, marketing director of St George's Park, a private retirement village in East Sussex.

Due in large part to socio-economic, cultural, demographic and geographic constraints, British retirement villages are smaller than in the US. "It's a new industry here and everybody does it slightly differently," says Smith.

British-style retirement villages may include a combination of croquet lawns, putting greens, swimming pools, spas, restaurants, bars, IT suites, libraries and so forth.

Naturally British versions are far less comprehensive than their new world counterparts – and almost never gated. Some, such as those run by Retirement Villages Ltd tend to be self-contained and self-sufficient, while others, Audley's for example, work on the principle of integration with neighbouring communities.

British retirement villages may be divided into two broad categories: not-for-profit, which may include an element of charitable subsidy, and those that are wholly commercial enterprises. Integral to retirement villages is that they can accommodate extra care when needed.

"Assisted living", which can mean help with personal ablutions is now standard fare.

"Retirement villages provide a lifetime lifestyle that can accommodate some element of extra care when needed," says Nick Sanderson, the chief executive of Audley.

Unlike independent retirement developments, retirement villages are "homes for life" that typically include independent living, assisted living and nursing home care.

To comply with legislation to modernise their 1860s charity care home for the elderly, the Sisters of St Augustine are building a 225-home retirement village at St George's. Phase three is scheduled for completion in 2011 and prices start at £340,000. Most are new-builds constructed on the footprint of historic buildings. One third of phase four's 106 apartments, yet to be launched, will be period conversions.

The restaurant serves fresh produce from St George's own farm. If nursing care is necessary, the next suitable place in the new care home will be offered.

Retirement Villages Ltd has 11 sites across the country with prices ranging from £155,000 to £495,000. Its flagship, Roseland Parc in Truro, is a self-contained village with a 30ft swimming pool and a huge array of other amenities and facilities. Similarly, Lime Tree, near Rugby, features 153 units including a refurbished Edwardian mansion on its 19 acres. Prices are between £169,000 and £155,000.

Denham Garden Village and the Laureates are not-for-profit retirement villages and part of Anchor Trust. Denham Village is set in 30 acres of private woodland in Buckinghamshire with 326 apartments and two- to three- bedroom houses that commence at £315,000. The Laureates, near Leeds features 62 apartments from £199,950 to £259,950.

The for-profit retirement village sector is expanding and its first professional body, the Association of Retirement Village Operators (ARVOUK), was formed last year with five companies – Audley, Care Village, Renaissance LifeCare plc, Retirement Villages Ltd and Richmond Villages.

Audley retirement villages feature the Audley Club, akin to a country house hotel in a period conversion, featuring a health and well-being centre and swimming pool.

Ownership of one of the properties confers membership at all Audley developments, of which there are seven at various stages of development and four on the planning board.

There are between eight to 125 apartments and cottages per development, with prices starting at £220,000 and going up to £750,000. Some villages have tennis courts and two have cricket grounds.

Richmond Villages has four operational villages. Prices range from £100,000 to £700,000 in both rural and urban settings, mainly apartments. They have the usual complement of facilities. Not all have swimming pools, but a flagship development in Painswick, Gloucestershire, does.

Newcomer Urban Renaisance Villages' first project is Bramshott Place Village, which launched last October as a gated community. The development is centred around a country club in the Hampshire countryside and contains 147 two- and three-bedroom eco-friendly apartments and cottages that cost between £295,000 and £499,000.

Mixed tenure

Assisted living is also integral to mixed tenure retirement villages. ExtraCare Charitable Trust works closely with housing associations and local authorities in creating retirement villages with properties for rent, outright purchase and part-purchase.

"We have eight UK retirement villages, of which the latest provide mixed tenure with around 15 different leisure facilities ranging from spa pools, gyms and IT suites to greenhouses, bowling greens and craftrooms," says ExtraCare's spokesman Richard Tower.

ExtraCare Nottingham is scheduled to open this summer and, with 327 properties, is one of the largest retirement villages in Europe. Full purchase price is £130,000 with part-purchases available at £68,000, ensuring affordability for, say, a person living in a relatively cheap property on a minimum state pension.

Birmingham's Oscott Village is another under site construction. The sales launch for its 260 mixed tenure homes will be held this July and the first apartments will be ready in spring 2010.

The Joseph Rowntree Foundation has three mixed tenure retirement villages, the latest of which in Hartlepool has just been completed.

Independent developments tend to be smaller than retirement villages, have fewer amenities and facilities and – although there will typically be estate management – there is unlikely to be an in-house provision for assisted care.

“When it comes to amenities, our buyers tend to prefer to join local golf clubs, country clubs or tennis clubs rather than having to pay for them in the service charges,” says Angela South from the developer Beechcroft.

At the top end of the independent spectrum, Beechcroft mixes period conversions with new-builds that cost from £250,000 to over £1?million in idyllic upmarket locations.

The Clock House in Byfleet, Sussex combines apartments in a Grade II listed building with a further 15 new apartments and houses priced from £250,000 to £320,000.

“Formal and private gardens are prime considerations for our buyers who have usually moved from properties with substantial grounds,” says South, who adds that “our buyers tend to downsize or cross-trade in equal proportions”.

Their special projects division is not designed for the over-55s but does have a covenant restricting the under-16s from living at the development full time, for example they can return from boarding school during the holidays.

Archstone Lifestyle Homes, unlike Beechcroft, offers some assisted living. Located in Wiltshire and Dorset, properties on four upmarket developments are priced from £240,000 to £500,000. At Abbeymead Court in Sherborne, with its courtyard and garden setting, prices start at £395,000.

Thirty-year-old McCarthy & Stone, a pioneer in the industry that has built around two-thirds of Britain’s retirement housing stock to date, is an exception to other independent builders as it has created an “assisted living” division.

“Assisted living service charges are typically £100 per week for a one-bedroom apartment and £150 for two bedrooms. This compares with charges at a private residential home of £500 and up a week,” says McCarthy & Stone spokesman Paul Davies.

Service charges includes all facilities, a laundry room, water rates, subsidised meals in the restaurant, access to duty staff 24/7, plus one and a half hours a week of domestic help. Council tax and heating is paid by the owner. Service charges for its conventional independent flats are roughly half the cost for assisted living.

“Our research shows that after a stay of 10 years, a family is better off typically upwards of £100,000 in an assisted living apartment compared with paying for care in a private residential home,” explains Davies.

“Thus you pay a quarter of what you’d pay in a residential home while at the same time you remain a property owner with equity – hopefully rising in value – to pass on to the next generation.”

McCarthy & Stone properties are nearly all new purpose built apartments in urban centres. Prices start from under £150,000 in England and go up to around £350,000 in the Home Counties or on the South Coast. In Scotland prices commence at less than £100,000.

Credit Crunch

No doubt the credit crunch has had an impact on the private retirement market, but not in the same way as on the open house market. Two casualties in the upmarket sector, however, have been English Courtyard and The Edward VII Hospital in Midhurst.

Jon Gooding, the chief executive of Retirement Villages Ltd explained what happened as the market began to soften from late 2007: “We were almost untouched by the woes of the volume house builders, and it was only when the squeeze on mortgage finance had worked its way through the system that our purchasers found themselves unable to complete on the sale of their own homes.”

Although this phenomenon is reported widely across the industry, some developments have bucked the trend with waiting lists at Beechcroft and Richmond, for example.

For a few months after the collapse of Lehman Brothers, the market seemed to be in shock. “Happily since the beginning of 2009, we have seen increased levels of activity,” says Gooding. A sentiment echoed by Davies at McCarthy & Stone, who believes that we are now seeing the first greenshoots of recovery.

However, the retirement sector is offering number of financial incentives to chivvy buyers along. McCarthy & Stone has a cashback scheme whereby a property that may have been on the market, say for 18 months, gets revalued by two local estate agents. If it is sold under the new evaluation, the firm will make up the difference to the owner.

It also offers a “Move for Free” pack that pays for all moving expenses including a decluttering service, plus stamp duty, solicitors and estate agent fees.

Expats

There has been a market slowdown in many countries where many expats wish to sell up and return to Britain. “We could sell up to 12 properties a week to people returning from Cyprus if only they could sell there,” laments Tim McVoy, Archstone’s sales and marketing director.

In other places, such as Spain, the exchange rate doesn’t help. According to Mark Bodega, the marketing director at HiFX currency specialists: “More than double the number of British expats are selling up their life in the sun and returning to the UK since the impact of the economic crisis last year.”

McVoy believes that more people who had thought of buying abroad are staying put because of the recession.

Happily some retirees can divide their time between a British property and one or more properties abroad. One couple, aged 81 and 78 respectively, live at St George’s retirement village and divide their time between a house in Christchurch, New Zealand, and England.

One of them, who preferred not to be named, said: “We spend a lot of time playing tennis, swimming and taking countryside walks. We bought here because of its 250-acre open farmland, lakes and woodland. And, the 'lock up and leave’ aspect is highly convenient.”

Hints and hazards

Retirement villages are usually sold on a 125-year lease basis whereas independents often offer a mix of freehold and leasehold. The minimum entry age is normally 55 or 60. Pets are usually welcome, though a meerkat has been refused. Parking is standard.

Services charges vary enormously – some retirement villages may include weekly bed linen laundering and an hour or more of weekly domestic help. Do read the small print, especially for assisted-living.

At St George’s you pay £3,900 a year, which includes your own allotment and a licensed 24-hour a day bar though, says Smith, the uptake is low.

McCarthy & Stone’s Davies points out assisted-living service charges may be offset by a government attendance allowance of up to £70.35 a week.

The sale of an independent development property is similar to an open market sale. But assignment fees, sales fees and departure fees are particularly relevant to retirement villages and may overlap to include costs for the sale of a property, management fees, capital costs and future maintenance/renewals fees.

In places like St George’s, you have to pay 20 per cent of any profit on the sale of your property to the charity, while elsewhere assignment fees etc may rise to 12.5 per cent of the sale value. These fees help determine how much you or your estate get back when you leave.

Make a comprehensive list of your requirements and compare what is on offer. Check costs carefully. Shop around. And take financial and legal advice before signing on the dotted line.